Salon Technology reports that all 3 of the Secure Digital Music Initiative's Watermarks have been broken by hackers. SDMI recently offered a $10,000 bounty to anyone who could break one of their 3 watermarking codes.

SMDI adamntly denies the claims that the codes have been successfully hacked and notes even if they had been broken it was a planned scenario, thus the $10,000 bounty.

The significance here is that as Warner Brother releases DVD-Audio titles on Novemebr 7, 2000 and DVD-Audio players are resting on store shelves today, will the RIAA and the record companies succumb to the pressure to get software on the street for the Christmas selling season? Beyond that will the record companies be forced to accept that no matter what kind of encryption they use, hackers who have the interest and or the motive will likely be able to break the watermarking code, no matter what.

If the RIAA and the music industry decide to pull scheduled releases this could really stall DVD-Audio's rise to prominance and miss the the best possible season for a new technology launch.

Clearly there is a great deal at stake here with this new format. We'll keep you posted as the story develops.